Friday, 18 March 2011

Osborne’s policies risk deflationary spiral, warns LEAP

. . . Calls for a Windfall Tax on profiteers to fund investment and jobs

The Coalition Government risks pushing the UK into a deflationary spiral warns the Left Economics Advisory Panel (LEAP) ahead of Wednesday’s Budget statement.

Osborne’s plans to date have already sapped demand from the economy through job losses, wage freezes, welfare cuts – and the full impact of cuts and job losses is yet to hit. LEAP identifies rising unemployment, pay freezes and sub-inflation pay deals, higher pension contributions, reduced capital spending and rising food and fuel prices as factors which could combine to push the UK into a deflationary spiral and possible double-dip.

A full report, published on Monday, will set out in full LEAP’s proposals ahead of the Budget. As well as the windfall tax on recession profiteers to fund investment in infrastructure and jobs, LEAP will also be calling for tax reforms to close the £120bn annual tax gap, introduce a Robin Hood Tax and to implement Land Value Tax.

John McDonnell MP, LEAP Chair, said:

"If the rumours around Osborne’s plans prove correct then this government and this Budget could send the economy into a deflationary spiral.

"We need an interventionist Budget that plans large scale investment in green jobs paid for by an immediate windfall tax on the profiteers from this recession: the banks, energy companies and supermarkets."

Andrew Fisher, LEAP Co-ordinator, said:

"Neoliberal policies were the cause of the recession and more of the same will deepen the crisis and make a double dip more likely. Osborne’s deregulating, tax-cutting agenda for business will only serve to further increase profit margins and executive salaries.

"While cuts have sapped demand, there has been rampant profiteering by the banks, energy companies and supermarkets. A windfall tax would prise open that capital and invest it in the jobs we need to bring down unemployment and avoid further misery for millions."